Note 4 - Held for Sale and Discontinued Operation

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 4: HELD FOR SALE AND DISCONTINUED OPERATION

On September 14, 2023, the Company and Intrinsix, then its wholly owned subsidiary, entered into a Share Purchase Agreement (the “Agreement”) with Cadence Design Systems, Inc. (“Cadence”), pursuant to which Cadence agreed to purchase all of the issued and outstanding capital shares of Intrinsix from the Company for $35,000 in cash, subject to other certain purchase price adjustments as provided for in the Agreement (the “Transaction”). The closing of the Transaction occurred on October 2, 2023. At the closing, an amount of $300 from the consideration was deposited with a third-party escrow agent for the purposes of satisfying any additional post-closing purchase price adjustments owed by the Company to Cadence, which was fully paid to the Company during the first quarter of 2024, a further amount of $3,500 of the consideration was deposited with the same escrow agent for a period of 18 months as security for the Company’s indemnification obligations to Cadence in accordance with the terms and conditions set forth in the Agreement, and after giving effect to post-closing adjustments resulting in a $240 repayment to the Company during the first quarter of 2024. The Agreement includes certain representations, warranties and covenants of the parties, and the Company also agreed to certain non-competition and non-solicitation terms, which are subject to certain exceptions.

Under ASC 205-20, "Discontinued Operation" when a component of an entity, as defined in ASC 205-20, has been disposed of or is classified as held for sale, the results of its operations, including the gain or loss on its component, are classified as discontinued operations and the assets and liabilities of such component are classified as assets and liabilities attributed to discontinued operations; that is, provided that the operations, assets and liabilities and cash flows of the component have been eliminated from the Company’s consolidated operations and the Company will have no significant continuing involvement in the operations of the component.

As a result of the Transaction, Intrinsix's results of operations and asset and liability balances are disclosed as a discontinued operation. All prior periods comparable results of operation, assets and liabilities have been retroactively included in discontinued operations.

The following table shows the Company's results of discontinued operation for the below presented period:

	Six months ended June 30, 2023 (unaudited)			Three months ended June 30, 2023 (unaudited)
Revenues	$	5,723		$	3,250
Cost of revenue		3,855			2,048
Gross profit		1,868			1,202
Operating expenses:
Research and development, net		3,655			1,538
Sales and marketing		489			163
General and administrative		479			258
Amortization of intangible assets		349			174
Total operating expenses		4,972			2,133
Operating loss		(3,104	)		(931	)
Financial income, net		3			3
Loss from discontinued operations before taxes on income		(3,101	)		(928	)
Income tax expense		—			—
Net loss from discontinued operation	$	(3,101	)	$	(928	)

The following table presents cash flows from discontinued operations:

	Six months ended June 30, 2023 (unaudited)
Net cash flows used in operating activities (*)	$	(1,902	)

(*) Amortization and depreciation allocated to discontinued operation for the six-month period ended June 30, 2023 amounted to $982.